# Buy Now, Pay Later: How retailers can build loyalty through ethical experiences  Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2022-04-29 Category: BUSINESS Category URL: https://financedigest.com/category/business Meta Title: The Evolution of Online Transactions: From Sting CDs to Buy Meta Description: Discover the history of online transactions, the rise of BNPL payment options, and the importance of customer experience in guiding customers to make informed URL: https://financedigest.com/buy-now-pay-later-how-retailers-can-build-loyalty-through-ethical-experienceshtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/istock-1347254205-1736815792561-compressed.jpg) ![](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/1-da-68-450x473-1736815792526-compressed.jpg) _By_ **_Ben Richards_** _UK Chief Experience Officer at VMLY&R_ The details of the first-ever online transaction are heavily debated. Some claim the first legitimate online transaction took [place in 1994 on a small](https://www.financedigest.com/queens-final-resting-place-is-a-small-chapel-in-historic-windsor-castle.html "Queen’s final resting place is a small chapel in historic Windsor Castle") website called NetMarket, where a CD of Sting’s “Ten Summoner’s Tales” was sold for $12.48. Others believe that the first transaction took place far earlier, in the 70s when a group of Stanford students controversially arranged the purchase of marijuana. While potentially nefarious behaviours still shroud some [online shopping](https://www.financedigest.com/the-high-street-is-dead-long-live-online-shopping.html "The high street is dead – long live online shopping! "), it has become a favourite for many. And with [online sales making up nearly a third of all sales in the UK last year](https://fashiondiscounts.uk/statistics-on-online-shopping-vs-in-store-shopping/#:~:text=Ecommerce%20vs%20brick%2Dand%2Dmortar,78.2%25%20%E2%80%94%20in%2Dstore.), it’s clear our time spent online forms a huge part of how we legitimately interact with brands today. It’s never been easier to find the item you want either; a couple of clicks later, the purchase is complete, and soon enough, it shows up at your door! It’s almost _too_ convenient. Add the possibility to split payments across several instalments, with a simple tick, for free, with no credit check, and buying online has been made even more attractive. [Buy Now Pay](https://www.financedigest.com/beat-the-exchange-rate-and-buy-that-dream-holiday-home-by-paying-in-pounds.html "Beat the exchange rate and buy that dream holiday home – by paying in pounds! ") Later (BNPL) payment options are rife across online commerce, and most popular online retailers now provide the option. But while it has made millions of goods more affordable for customers, there are [growing concerns around its ethics and whether consumers need](https://www.financedigest.com/55-of-uk-smes-unable-to-access-all-funding-needed-to-grow.html "55% of UK SMEs unable to access all funding needed to grow") to be better informed and protected. In [the UK, the government](https://www.gov.uk/government/consultations/regulation-of-buy-now-pay-later-consultation) has already set out their intentions for the FCA to regulate these products in future. This is particularly clear as new data shows that [nearly half of 16-to-24 year-olds used BNPL services last year](https://www.thisismoney.co.uk/money/cardsloans/article-10403727/Buy-pay-later-used-42-Gen-Z-Britain-year.html) despite age restrictions and ethics experts pointing out that “It’s [just saying debt is fun](https://www.bbc.co.uk/bbcthree/article/3df91ac4-9098-46e9-b619-fae016bce3fb).” Most BNPL companies are yet to make a profit, and in some cases, consumers have benefitted from pre-IPO targets of [gaining market share](https://www.financedigest.com/bayer-shares-gain-on-prospect-of-second-activist-pushing-for-change.html "Bayer shares gain on prospect of second activist pushing for change") over currency, but that will come to an end sooner or later. It will be intriguing, and one could paint a bleak picture, to [see how brands will behave once the need to make a profit](https://www.financedigest.com/jd-sports-sees-bills-free-young-shoppers-boosting-profits.html "JD Sports sees bills-free young shoppers boosting profits") comes into play. **Guiding customers to the “right” decision** Brands have a responsibility to help their customers make the right decision. And by “right” decision, it doesn’t mean [businesses should force customers to make purchases in a particular way](https://www.financedigest.com/5-simple-ways-in-which-your-business-can-save-water.html "5 simple ways in which your business can save water") – frankly, it’s not their place, nor is it a burden they should _want_ to take on. It’s about businesses [understanding their customers better and guiding](https://www.financedigest.com/a-brits-guide-to-understanding-commodity-trading.html "A Brit’s Guide to Understanding Commodity Trading") them to make the “right” decisions for _them._ The key to this lies with [customer experience](https://www.financedigest.com/is-your-customer-experience-exceptional.html "IS YOUR CUSTOMER EXPERIENCE EXCEPTIONAL?") (CX). Good CX fundamentally [means caring](https://www.financedigest.com/psd2-what-it-means-and-why-we-should-all-care.html "PSD2: What It Means, And Why We Should All Care") for your customers, which makes them feel good about your brand. It can even turn around bad-on-paper experiences; say, you order clothes and receive the wrong size, if it’s fixed quickly and easily, your customers will respond well. ASOS has done this exceptionally, with people choosing to buy with them over competitors because of their reputation for convenient and quick returns. So, when looking at their user journey or CX, brands need to carefully consider what they are including. Some easily missed elements can be a pivotal part of the experience and a great reputation builder. And this applies to BNPL schemes; often, [retailers don’t view their plug-in partners](https://www.financedigest.com/route-genie-partners-withnorsk-global-to-provide-retailers-with-increased-international-carriage-choice.html "Route Genie Partners WithNorsk Global To Provide Retailers With Increased International Carriage Choice") as part of their user journey. They see it as an ‘offshored’ part of the experience and entirely wash their hands of responsibility. Herein lies an [interesting ethical challenge](https://www.financedigest.com/new-gleif-challenge-facility-extends-ability-to-trigger-updates-of-legal-entity-identifier-data-to-all-interested-parties.html "New GLEIF Challenge Facility Extends Ability to Trigger Updates of Legal Entity Identifier Data to All Interested Parties"). If one of your [customers opts to use BNPL to pay](https://www.financedigest.com/shell-energy-to-pay-for-overcharging-price-cap-customers-ofgem.html "Shell Energy to pay for overcharging price cap customers -Ofgem") for a low-cost item, should you be selling more to that person? Retailers can make assumptions about that [customer’s financial](https://www.financedigest.com/how-fintech-aids-financial-inclusion-and-helps-customers-through-crises.html "How Fintech aids financial inclusion and helps customers through crises") situation based on the decision to pay in instalments, giving them insight into what experience they need. Retailers should be asking, is there a way of optimising this experience _and_ doing the right thing? It would be an innovative behaviour for brands to look at [saving structures rather than loans; and a fantastic positive reputation booster I bet](https://www.financedigest.com/student-loans-hurting-workers-ability-to-save-for-retirement.html "STUDENT LOANS HURTING WORKERS’ ABILITY TO SAVE FOR RETIREMENT"). Adding steps to the payment journey may seem counter-intuitive, but offering [customers a chance to consider what they’re buying](https://www.financedigest.com/should-insurers-buy-data-direct-from-their-customers.html "Should insurers buy data direct from their customers?") can be an essential step. A smooth basket/checkout experience should be a given, but when it comes to BNPL, perhaps friction can be good and will actually help [protect customers](https://www.financedigest.com/banks-can-provide-a-protective-shield-to-defend-customers-from-cyber-attack.html "Banks can provide a protective shield to defend customers from cyber attack"). And ultimately, this will [increase loyalty](https://www.financedigest.com/fintechs-how-to-increase-loyalty-through-user-experience-and-fraud-prevention.html "FinTechs: How to increase loyalty through user experience and fraud prevention") and long-term trust in the retailers. **The role of data in enhanced CX** It is basic; using information about your [customers to understand them better will drive loyalty](https://www.financedigest.com/how-do-you-build-customer-loyalty-3-steps-to-follow.html "HOW DO YOU BUILD CUSTOMER LOYALTY? 3 STEPS TO FOLLOW"). Greater personalisation based on need is what all brands should strive for. Brands are already off to a flying start when people want to [buy a low priced item and spread the cost](https://www.financedigest.com/blessing-or-burden-what-else-could-you-buy-for-the-cost-of-your-timeshare.html "Blessing or burden? What else could you buy for the cost of your timeshare?") over three months – it shows they really want that item. So [offering personalised deals](https://www.financedigest.com/twitter-shares-cruise-towards-musks-offer-price-as-deal-deadline-looms.html "Twitter shares cruise towards Musk’s offer price as deal deadline looms") that create healthier spending habits can only double down on this loyalty. It also ensures the value brands [bring to their customers goes beyond that single shopping experience](https://www.financedigest.com/visionary-banks-fight-the-blur-hybrid-computing-architecture-brings-a-faster-sharper-customer-experience.html "Visionary banks fight “the blur”: Hybrid computing architecture brings a faster, sharper customer experience"). There is an even bigger opportunity for brands when considering Gen Z consumers. Not only are Gen Z excellent long-term [customers – people tend to earn more money as they grow older- but they are primed to be educated about healthy financial](https://www.financedigest.com/video-collaboration-is-pushing-the-boundaries-of-the-customer-experience-in-financial-services.html "Video Collaboration is pushing the boundaries of the customer experience in Financial Services") habits. [Two in five](https://home.barclays/news/press-releases/2022/03/two-in-five-gen-z-shoppers-using-unregulated-bnpl-feel--overwhel/) Gen Z shoppers using BNPL say they feel ‘overwhelmed’ by repayments. Retailers and their partners can guide and inspire them to shop within their means and make debt education an engaging part of the check-out experience. So, as the BNPL scramble rages on, with the likes of Klarna gobbling up market share and the likes of PayPal and [retail banks](https://www.financedigest.com/uk-retail-banks-is-irrelevance-curtailing-opportunity.html "UK Retail Banks: Is Irrelevance Curtailing Opportunity?") snapping at its heels, it’s a conversation that is just beginning. But with regulations on the horizon and bad press piling up, it is a moment of opportunity to make an often clunky part of the CX both exciting and valuable. And the earlier [brands and retailers decide to guide and inspire people](https://www.financedigest.com/how-a-british-tech-brand-can-maintain-category-leading-position-and-continued-growth-by-investing-in-the-uk-people-and-infrastructure.html "How a British tech brand can maintain category leading position and continued growth by investing in the UK people and infrastructure") to shop within their means, the more they have to win. --- This blog is powered by Superblog. 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